1 thought on “Are there really no alternatives to tax increases (as the IFS claims)?”

  1. Posted 24/06/2018 at 14:47 | Permalink

    To find more money the government has 3 basic possible alternatives: a) print more money and give it to the NHS to spend, b) borrow more money with the same use, c) tax more money for the same use.

    If it prints more money there will be an increase in the prices, due to an inflation in the demand for what currently is the same quantity. Savers will find they have lost spending power when they get their money returned. Borrowers will find that when they return their credit, that it is easier to do because it has less value in terms of purchasing power. Thus is not only dishonest but is generally adverse.

    If the government borrows money, there will be a rise in the national debt and in the amount of interest it needs to cover its existence. This is adverse and can only be met with a continuation in the total sum being loaned. It will also reduce the long-term power of money to buy goods as noted above.

    If the government decide to increase taxes the effect will hurt those who pay the tax even if it does allow them better NHS. Most private investors would claim that if the same money were privately invested in health care the results would be greater, and the national system is inefficient (of necessity). However not all kinds of taxation would result in the same effects and were a new form of taxation in land values to be introduced it would encourage the better use of our useful sites of land so that the inefficiency of the NHS would be compensated by the improvements in how each city was shared in that its land-based opportunities would be less wasted and city sprawl less common.

    Conclusion: its a difficult subject but to simply add more tax without understanding ALL its effects is not the right way to go, even if it is less damaging than increased borrowing or money printing.

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